Across different businesses and functions, organizations are confronted with multiple challenges. Operating in the global environment where the dynamics expand and shift relentlessly, concentrating on all the business processes may lead to compromises in the core competencies. However, some priorities stay constant across different businesses, and one such business choice is Outsourcing. Outsourcing is a major strategic decision which involves weighing the benefits against the consequences and entrusting the business processes to external vendors. It is encompassing functions closer to the core business, offering economic and strategic benefits. Outsourcing is gradually gaining popularity as a critical management lever to improve competitive advantage, business innovation and customer relationships. Cost reduction is usually the most oft-cited reason for outsourcing, and to some extent, service or product improvement as well, however, there are several subtle benefits which are not so easy to quantify.
The benefits of outsourcing are not limited to any particular industry or domain, and outsourcing partners can design and implements systems that best fit any given business, their ambition and their budget. Businesses can dodge expensive overhauls due to scalability of outsourcing. There are several reasons to outsource, and some of the most common benefits are:
- Cost Advantage
- Access to state-of-the-art capabilities and skilled resources
- Improved organization focus
- Increased Efficiency
- Access to resources unavailable internally
- Freed-up available internal resource
- Accelerated Re-engineering benefits
- Savings on Infrastructure and technology
- Time Zone Advantage
What to look for In Outsourcing Partner
Outsourcing is a boon for many enterprises as it enables them to concentrate on what they do best. However, to reap full benefits of outsourcing, consider the following guidelines:
- The most important step in the decision for outsourcing is to identify whether or not it is something you need. It is tricky, however if you have identified the tasks and processes you need to outsource, you are in the right direction. Once the needs are defined, you need to dig at the specifics of each business function that needs to be outsourced so that the goals and objectives of outsourcing can be clearly identified.
- An important consideration while choosing the outsourcing partner is to see if their business aims and objective match with yours, and the partner is able to clearly understand your business objectives.
- Service Level Agreement (SLA) lays out key deliverables in writing and is a good way to compare the offerings of different service providers. Look for hit rates to understand if their targets are the accurate representation of the actual service.
- While communicating with the potential outsourcing partners, you need to communicate how business functions need to be done, what is the budget, expectations of the results and turnover time.
- Seek proof of proven skills in the key areas. Ask for references to find more about the service quality, support and deliveries.
- Ensure the financial stability of the partnering firm. It may be helpful to find out details about directors, managers, their qualifications and their experience. This information will enable you to gauge the worthiness and credentials of the firm. Visit the partner’s workplace to ensure that they have high-end technology and best-of-breed infrastructure that are relevant for your project. This will also help you better understand their methodologies and processes.
- Outsourcing partner should have good networking with the high-end suppliers that provides easy point of contact for all technical and non-technical requirements. The products recommended by the partners should fit the businesses well, and decision should not be based on maximum commission that the partnering company gets from its suppliers.
- The outsourcing partner should be able to provide reliable service desk support whether it is a quick advice or an underlying technical problem. Due to economies of scale, it is cheaper to outsource, than to have onsite employees. However, the outsourcing partner should be able to provide complete visibility to the raised tickets, and convenient access to the service desk staff.
- The staff of the outsourcing partner should be able to communicate in the same language as good communication can assure good long term relationship.
- Ensure that “24×7” involves around-the-clock help from the trained engineers if required, else the support given will be of the answering machine, or unknowledgeable call center staff.
- Ensure that the account manager has the essential skill and knowledge, and is willing to have personal face-to-face meetings to cover targets and areas of improvement
- To boost the relationship between the in-house and service provider’s staff, scheduled visits can help understand key processes and products better.
- Clarify the inclusions of support package and ensure clear terms for transparent billing.
- The service provider should be able to give right to jump the queue in case of critical scenarios. The cases should be prioritized based on operational impact.
- There must be a reliable and proven management platform so that the systems and be analyzed and rectified remotely. In-house tools may not have been tested thoroughly, and resources might be more concentrated on development rather than providing services.
- The service provider should be able to accurately forecast and anticipate the growth in the business, and be able to scale accordingly, without losing the focus on service.
- Great workforce can lead to great partnership. For any outsourcing partnership, look for the staff award, workplace accolades and other indications that employees in the company are given competitive environment and tools for professional growth.
Once the research is complete, form a special team to conduct the evaluation of the few finalized outsourcing partners, and prepare a plan for Request for Information (RFI) in order to gather the essential information. Once the shortlisted vendors submit their request for proposal (RFP), you can start the evaluation. After all the details are obtained from the service provider, choose the company that is most closely aligned with your outsourcing objectives. It is also important to keep the internal staff well-informed about the participation of external vendor as their cooperation and support is mandatory for the successful integration and materialization.